Entries in Cost & Utilization (82)

Friday
Sep082017

Health Care's Juicero Problem

Health Care's Juicero Problem
 

by Kim Bellard, September 8, 2017

Bad news: if you were still hoping to get one of the $400 juicers from Juicero, you may be out of luck. Juicero 
announced that they were suspending sales while they seek an acquirer. They'd already dropped the juicer's price from its initial $700 earlier this year and had hoped to find ways to drop it further, but ran out of time. 

Juicero once was the darling of investors. They weren't a juice company, or even an appliance company. They were a technology company! They had an Internet-of-Things product! They had an ongoing base of customers!

The ridicule started almost as soon as the hype. $700 -- even $400 -- for a juicer? The negative publicity probably reached its nadir in April, when Bloomberg 
reported people could produce almost as much juice almost as fast just by squeezing the Produce Packs directly.

 

Moral of the story: if you want to introduce products that have minimal incremental value but at substantially higher prices, you're better off sticking to health care.

Take everyone's favorite target, prescription drugs. As Donald W. Light 
charged in Health Affairs, "Flooding the market with hundreds of minor variations on existing drugs and technically innovative but clinically inconsequential new drugs, appears to be the de facto hidden business model of drug companies."

As with prescription drugs, we regulate medical devices looking for effectiveness but not cost effectiveness -- and we don't even do a very good job evaluating effectiveness in many cases, according to a 
recent JAMA study

Take robotic surgery, hailed as a technological breakthrough that was the future of surgery. A robotic surgical system, such as da Vinci, can cost as much as $2 million, but, so far, evidence that they produce better outcomes is 
woefully scarce

Proton beam therapy? It's one of the latest things in cancer treatment, an alternative to more traditional forms of radiation therapy, and is 
predicted to be a $3b market within ten years. The units can easily cost over $100 million to buy and install, cost patients significantly much more than other alternatives, yet -- guess what? -- not produce measurably better results

Last year Vox 
used 11 charts to illustrate how much more we pay for drugs, imaging, hospital days, child birth, and surgeries than other countries. Their conclusion, which echoes conclusions reached by numerous other analyses: "Americans spend more for health care largely because of the prices."

We not only don't get a nifty new juicer from all of our health care spending, we 
don't even get better health outcomes from it.   

Health care's "best" Juicero example, though, may be electronic health records (EHRs). Most agree on their theoretical value to improve care, increase efficiency, and even reduce costs. But after 
tens of billions of federal spending and probably at least an equal amount of private spending, we have products that, for the most part, frustrate users, add time to documentation, and don't "talk" to each other or easily lend themselves to the hoped-for Big Data analyses. 

Many physicians might, on a bad day, be willing to trade their EHR for a Juicero. 

Jonathon S. Skinner, a professor of economics at Dartmouth,
 pointed out the problem several years ago: "In every industry but one, technology makes things better and cheaper. Why is it that innovation increases the cost of health care?" 

So we can make fun of Juicero all we want, but when it comes to overpriced, under-performing services and devices: health care system, heal thyself first.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

 
Friday
Jun162017

A Dozen Takeaways From PwC’s Medical Cost Trend: Behind the Numbers 2018 Report

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By Clive Riddle, June 16, 2017

 

PwC’s Health Research Institute has released Medical Cost Trend: Behind the Numbers 2018, their twelfth annual report projecting the growth of private sector medical costs in the coming year and identifying the leading trend drivers. The findings are largely based upon PwC’s annual Health & Well-being Touchstone Survey results, which draws from responses of 780 employers from 37 industries, and have also just been released.

 

Here’s a dozen takeaways from this year’s 32 page Behind the Numbers report, and 114 page Touchstone Survey report:

 

1.       PwC’s HRI projects a 6.5 percent growth rate for next year, a half percentage point increase from the estimated 2017 rate.
 

2.       This growth rates steadily decreased from 11.9% in 2007 to 6.5% in 2014, and has fluctuated slighly above or below that figure since then
 

3.       PwCs provides this definition of their projected medical cost trend: the “increase in per capita costs of medical services that affect commercial insurers and large, self-insured businesses. Insurance companies use the projection to calculate health plan premiums for the coming year.”
 

4.       PwC's HRI has identified three major inflators expected to impact medical cost trend in the coming year: (A) Rising general inflation impacts healthcare. As the U.S. economy heats up, a rise in general inflation during 2016 and 2017 will likely put upward pressure on wages, medical prices and overall cost trend in 2018; (B) Movement to high-deductible health plans is losing steam. The wave of growth in high-deductible health plans, employers' go-to strategy in recent years to curb health spending, may be plateauing; and  (C) Fewer branded drugs are coming off patent. Employers may have less opportunity to encourage employees to buy cost-saving generics in 2018.
 

5.       PwC's HRI has identified two major deflators expected to impact medical cost trend in the coming year: (A) Political and public scrutiny puts pressure on drug companies. Heightened political and public attention could encourage drug companies to moderate price increases; and (B) Employers are targeting the right people with the right treatments to minimize waste. They are doubling down on tactics such as prescription quantity limits and exploring new technologies such as artificial intelligence to match people with the best treatment.
 

6.       The report also cites these healthcare drivers affecting the 2018 cost trend:  Technology and treatment innovation: Provider and Plan Consolidation; Government regulation; and Evolving Payment models.
 

7.       The report allocated these proportions of costs by component for 2018: Pharmacy 18%; Inpatient 30%; Outpatient 19%; Physician 29%; Other 4%
 

8.       The Touchstone Survey cites that “Medical plan costs have continued to increase, but employers expect that the rate of increase will start to slow. Plan design changes contributed towards slightly lower-than-expected increases in 2016;” and that “the average increase in 2016 was 6.8% before plan design changes and 3.6% after plan design changes. In 2017, participants expect to see a 6.0% increase before plan design changes and a 3.2% increase after plan design changes.”
 

9.       The Touchstone Survey notes that “participants appear to be in a "wait and see" mode – rather than considering broader and more transformational changes, they continue to use traditional cost-shifting approaches to control health spend;” and that “57% of participants expect to continue to increase employee contributions in the next three years, while 38% (29% for Rx) plan to increase employee cost-sharing through plan design changes.”
 

10.   The Touchstone Survey finds that “participants are increasing contributions in the form of surcharges for spouse, domestic partner and dependent coverage. This may be contributing towards a decrease in enrolled family size and slowing the rise in net employer spend.”
 

11.   The Touchstone Survey also finds that “participants are utilizing High Deductible Health Plans (HDHPs) more and Preferred Provider Organizations (PPOs) less, although PPOs remain more popular among employees. PPOs are the highest-enrolled plan 44% of the time, compared to 46% in 2016 and 60% in 2009. HDHPs are the highest-enrolled plan 34% of the time, up from 32% in 2016 and 8% in 2009.”
 

12.   The Touchtone Survey found that employer interest in population health is strong but private exchange interest is waning. They report that “79% offer wellness programs compared to 76% in 2016, and 63% offer DM programs compared to 56% in 2016;” while  “8% of participants are considering moving their active employees to a private exchange; 2% have already done so. Interest seems to have dropped off as the discussions on public exchanges and ACA have increased. However, 36% of participants who offer retiree medical coverage are considering moving pre-65 retirees to a private or public exchange.”
 

 
Friday
Jun092017

Centura Health Shares Strategies for Reducing Readmissions in Bundled Payment Arrangements

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By Clive Riddle, June 9, 2017

 

Two experts from Centura Health, the Colorado based healthcare system shared their organization’s strategies in reducing readmissions in bundled payment arrangements for total hip and knee replacements, as part of a panel presentation in a HealthcareWebSummit event held this week on “Advanced Strategies in Appropriately Reducing Bundled Payment Arrangement Readmissions.”

 

Centura’s Kristen Daley, Group Director – Value Based Programs, and Brenda Lewis, RN, MBA-HCM, CCM, ACM Group Manager – Care Coordination started by providing context from the literature for total hip arthroplasty (THA)  and total knee arthroplasty (TKA):

·         5.6% of THA and 3.3% of TKA require Readmission within 30 days of discharge

·         Unplanned Readmissions Costs for Medicare Patients = $17.5 Billion/Year

·         THA costs: $17,103/Readmission

·         TKA costs : $13,008/Readmission

 

Daley and Lewis reminded us that elevated patient risk factors for these readmissions come from increased age; male gender; african american race; and medical co-morbidities including obesity,

chronic pulmonary disease, bleeding disorders, cancer history, and psychiatric illness.

 

They cited the leading complication for readmissions is infection: (12.1% of unplanned 30 day readmission) and the many other causes including: systemic: pulmonary, cardiac and circulatory; joint specific:  dislocation, fracture, malposition; hematoma, falls; failure to mobilize; increased pain and

social determinants. They noted 50% of these readmissions are unrelated to the patient’s index arthroplasty.

 

Here is Daley and Lewis’ summary of their readmissions reduction strategies:

·         Team Approach: All Providers and Caregivers Engaged, Communicating, and on the same page

·         Every Patient receives preoperative medical evaluation/optimization by Perioperative Hospitalists

·         Perioperative Hospitalists round post-op and collaborate on discharge with the Surgeon

·         Robust Care Coordination Program

·         Prepare Patients for Efficient Discharge

·         Front-Load Discharge Planning

·         Partner with Acute Case Management Team

·         Promote use of Preferred Partners

·         Extend Patient Management Post-Discharge

 

They have undertaken the following to prepare patients for the transition from hospital to home:

·         Begin Education Preoperatively and Re-emphasize throughout Hospitalization

·         Embed Care Coordinator into Joint Education Class

·         Utilize LACE Tool to Assist to Identify Risk of Readmission (The LACE index identifies patients that are at risk for readmission or death within thirty days of discharge)

·         Provide Detailed Discharge Instructions

·         Educate patients on Wound Care, DVT Signs

·         Help patients with understanding Pain Management

·         Emphasize importance of Post-op Rapid Mobilization and Physical Therapy

 
Thursday
May182017

Investing in an Index Fund tied to the Milliman Medical Index instead of the Dow Jones Industrial Average

By Clive Riddle, May 18, 2017

Milliman has just released their 2017 Milliman Medical Index, which measures the cost of healthcare for a typical American family of four receiving employer PPO coverage. The total family bill is $26,944 compared to $4,518 in 2001. I want to invest in an index fund tied the Milliman Medical Index. The annual rate of return since 2001 would be 11.805%, compared to 3.874% for the Dow Jones Industrial Average during that same time (Dow Jones May 16 2001: 11,215.92; Dow Jones May 16 2017: 20,606.93). Our Milliman Medical Index fund would outperform the Dow index fund by three times.

But since the Milliman index fund only exists in some alternate universe for now, we might as well dive into some of findings Milliman shares in their 12-page report on this year’s index: 


Pharmacy share of costs have increased during this this time (from 13% to 17%) as have Outpatient (from 14% to 19%) while Professional services decreased (from 40% to 30%) and Inpatient remained about the same (from 30% to 31%).

Here verbatim are Milliman’s three key findings:

1. The MMI’s annual rate of increase is 4.3%. This is the lowest rate since we began tracking the MMI in 2001. Yet the total dollar amount is still bracingly high. Of the $26,944 spent by the MMI’s family of four, $11,685 is paid by the employee, through a combination of $7,151 in payroll deductions for premium, and $4,534 in out-of-pocket costs incurred at time of care.

 

2. Prescription drug trends are lower, but still high. For the first time since 2013 and 2014, the family of four’s prescription drug trends have decreased in two consecutive years. Still, the 2017 prescription drug cost increase of 8% is more than double the medical increase of 3.6%.

 

3. Employees pay a bigger piece of the healthcare cost pie. Through their payroll deductions and through out-of-pocket expenses incurred when care is received, employees now pay for about 43% of expenses and employers pay the other 57%. The difference between these two shares has gradually narrowed since 2001, when employees contributed 39% and employers contributed 61%. High growth in per-employee healthcare expenditures have pushed employers to limit their contribution increases to amounts below the rate of healthcare inflation.


Thursday
Apr272017

What Goes into Combating Healthcare Fraud

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By Claire Thayer, April 27, 2017

According to the National Health Care Anti-Fraud Association, most health care fraud is committed by organized crime groups and a very small minority of dishonest health care provider. The NHCAA tells us that the most common types of fraud include:

·         Billing for services that were never rendered-either by using genuine patient information, sometimes obtained through identity theft, to fabricate entire claims or by padding claims with charges for procedures or services that did not take place.

·         Billing for more expensive services or procedures than were actually provided or performed, commonly known as "upcoding"-i.e., falsely billing for a higher-priced treatment than was actually provided (which often requires the accompanying "inflation" of the patient's diagnosis code to a more serious condition consistent with the false procedure code).

·         Performing medically unnecessary services solely for the purpose of generating insurance payments.

·         Misrepresenting non-covered treatments as medically necessary covered treatments for purposes of obtaining insurance payments-widely seen in cosmetic-surgery schemes, in which non-covered cosmetic procedures such as "nose jobs" are billed to patients' insurers as deviated-septum repairs.

·         Falsifying a patient's diagnosis to justify tests, surgeries or other procedures that aren't medically necessary.

·         Unbundling - billing each step of a procedure as if it were a separate procedure.

·         Billing a patient more than the co-pay amount for services that were prepaid or paid in full by the benefit plan under the terms of a managed care contract.

·         Accepting kickbacks for patient referrals.

·         Waiving patient co-pays or deductibles for medical or dental care and over-billing the insurance carrier or benefit plan (insurers often set the policy with regard to the waiver of co-pays through its provider contracting process; while, under Medicare, routinely waiving co-pays is prohibited and may only be waived due to "financial hardship").

While the U.S. Department of Justice, FBI, CMS and other government entities are busy identifying and tracking down fraud schemes, Deloitte research points out that an emerging area of interest in health care fraud and abuse enforcement is that of relationship scrutiny.

This weeks’ edition of the MCOL Infographic, co-sponsored by LexisNexis, highlights some of the costs associated with fighting healthcare fraud:

(Click to View Full Size Image)

What goes into combating healthcare fraud?

(Click to View Full Size Image)


MCOL’s weekly infoGraphoid is a benefit for MCOL Basic members and released each Wednesday as part of the MCOL Daily Factoid e-newsletter distribution service – find out more
here.